Though there are many advantages for the partnership firms, there are certain drawbacks as well and they are as follows:
- Unlimited Liability: In case the business assets are not sufficient for the partners, they are in a position to give away their personal assets to clear off their debt. The liability of partners is both joint an several and is a problem for those partners who have immense wealth.
- Limited Resources: There is a restrictions as to the number of partners and so the investment is not enough for business to be performed on a large scale. So partnerships cannot expand beyond a specific level.
- Possibility of Conflicts: Since partnership deals with many partners, a conflict arises due to difference of opinion between them. Not all partners agree to the decisions made and sometime the conflict might also occur when the decision of a partner ruins their financial position.
- Lack of Continuity: Partnership comes to an end due to the death or insolvency or death of a partner. Alternatively, a fresh agreement can bind the remaining partners.
- Lack of Public Confidence: Its is not mandatory for a partnership firm to reveal its financial positions to the public. This puts the public in the dark about their financial position. This does not bring the people look up at partnership.